A Profile of Research and Development and Innovation in the Tasmanian Economy: Report for the Department of Innovation, Industry, Science and Research

Downloads

Downloads per month over past year

O'Brien, KR and Torugsa, A
(2011)
A Profile of Research and Development and Innovation in the Tasmanian Economy: Report for the Department of Innovation, Industry, Science and Research.
Project Report.
UTAS/AIRC.
(Unpublished)

Abstract

The origins of policies that support business R&D can be traced back to economic
theories in the new growth or endogenous growth tradition, which view new
knowledge as a source of economic growth. Interest in quantifying the contribution of
knowledge to growth led to the development of the OECD Frascati Manual in 1962.
The manual provided an agreed conceptual framework for standardised statistical
measurement of R&D, and following its wider adoption by member countries in 1963
the availability ofharmonised cross country datasets on R&D increased. This resulted
in a range of empirical economic studies, many of which indicated that industry and
economy wide output increases attributable to R&D inputs were significant, with
spillover returns from R&D investment found to be larger than private returns l
. Thus
firm investments in the production of new knowledge create an externality issue as
firms are unable to appropriate all of their investments in R&D, leading to spillovers
in benefits to other firms. Although this is of benefit to society, this type of market
failure can lead firms to under invest in R&D. Thus R&D tax concessions were
implemented to address the market failure, shifting some of the risks to government
by creating added incentives for R&D investment.